On November 23, 2025, Prime Minister Mark Carney stood before reporters in Johannesburg, South Africa, at the G20 Summit, offering a measured response to the latest turbulence in Canada’s relationship with its southern neighbor. “I don’t have a burning issue to speak with the president about right now,” Carney said, referring to U.S. President Donald Trump, whose administration had recently imposed punishing tariffs on Canadian steel, aluminum, and autos, derailing trade talks between the two countries. Carney added that he would “speak to him again when it matters,” signaling a cautious approach as Canada navigates a world order that is rapidly shifting under Trump’s leadership.
The G20 meeting itself was marked by the conspicuous absence of the United States, a move that underscored growing divisions. According to CBC, Carney’s focus has turned toward diversifying Canada’s trade relationships, with a strategic pivot toward China now a central part of the government’s agenda. This approach is not without risks, but analysts say it is increasingly necessary as the U.S. grows more unpredictable and, in some eyes, unreliable as a partner.
Canada’s reliance on the U.S. market has long been a defining feature of its economy. In 2024, roughly 75 percent of Canadian exports were destined for the U.S., while only about five percent went to China, despite China being Canada’s second-largest trading partner. Canadian exports to China were valued at about $30 billion last year, according to the Canada China Business Council. With Carney setting an ambitious goal to double Canada’s non-U.S. exports in the next decade, there is both urgency and opportunity in this pivot.
But as the government looks eastward, it is also investing heavily in its own sovereignty and security—especially in the Arctic. The newly released fall budget committed $81.8 billion over five years to the Canadian Armed Forces, with $76 million earmarked specifically for the Northern territories. The budget, as quoted by Yahoo Canada, states, “Through these investments, we are giving our Canadian Armed Forces the tools they need to defend every square foot of our sovereign territory, from the seafloor to the Arctic to cities to cyberspace, and to protect Canadians from present and emerging threats.”
This significant investment comes amid growing concerns among residents of Canada’s North. A 2025 poll by the Observatoire de la politique et de la sécurité de l’Arctique (OPSA), surveying 608 residents in Yukon, Northwest Territories, and Nunavut, found that 37 percent identified the United States as the greatest threat to the region, followed by Russia at 35 percent, and China at 17 percent. A striking 85 percent of respondents said Canada must actively use its Arctic sovereignty or risk losing the territory, with 62 percent supporting a firm defense approach and only 26 percent favoring diplomacy.
Concerns about U.S. intentions in the Arctic are not unfounded. University of Toronto political professor Franklyn Griffiths, writing in The Globe and Mail, warned that President Trump could attempt to assert control over the Northwest Passage by sending ships through the region without Canadian permission—challenging Canada’s sovereignty. The dispute over the passage dates back decades: in 1985, the U.S. sent a ship through the waterway without Canada’s consent, leading to a 1988 agreement that required U.S. consent for such travel. Yet in 2019, then-U.S. Secretary of State Mike Pompeo called Canada’s claim to the route “illegitimate,” making clear the U.S. stance that the passage should be considered international waters.
Experts like Rob Huebert, a political science professor and Arctic expert at the University of Calgary, told Yahoo Canada that if the U.S. were to send a ship through the passage without permission, “it would be a very real sovereignty threat to Canada.” He noted, however, that sending a warship would be risky due to Arctic ice, making it more likely that the U.S. would use one of its two icebreakers. “They would have to do a lot of planning (if they send a ship),” he said. “It would have to be very much a political decision at the highest level because the American Coast Guard has better things to do with its time, quite frankly.”
The strategic implications go beyond surface ships. Pierre Leblanc, principal of Arctic Security Consultants and former commander of a joint task force in the North, warned that opening the passage would allow not just ships but also submarines and aircraft—including potential adversaries like Russia and China—to use the route. “Soviet bombers could actually transit the northern part of Canada by flying over the Northwest Passage,” he cautioned. The threat of hypersonic cruise missiles and the region’s valuable natural resources add further complexity to the sovereignty debate.
Trump’s administration has shown a willingness to disregard international norms in other areas as well, raising the stakes for Canada. Leblanc pointed to Trump’s actions, such as detaining suspected illegal immigrants without a warrant and threatening to take Greenland, as evidence of a pattern that could extend to the Arctic. Jessica Shadian, president and CEO of the think tank Arctic360, highlighted the importance of critical minerals in the North, noting that the U.S. has sought preferential access to such resources elsewhere, as in its recent deal with Ukraine. “We should always be concerned when a country is taking and owning other countries’ critical resources,” she warned.
Against this backdrop, Canada’s relationship with China becomes even more consequential. According to CBC, the government is reviewing its 100 percent tariff on Chinese electric vehicles, a move that could help end a costly trade war that has seen China impose counter-tariffs on Canadian canola, seafood, and pork. There are also opportunities for collaboration in manufacturing, research and development, and especially in electric vehicle technology and critical minerals—areas where China is a global leader.
Colin Robertson, a former Canadian diplomat, told CBC that partnerships with China might be the only way to protect Canada’s auto sector in the wake of U.S. decoupling. “We have to look to our own interests,” he said, suggesting that working with China on electric vehicle battery production could be a pragmatic step.
But the relationship is not without its challenges. Experts urge Canada to balance the risks, taking into account concerns about human rights and cyber interference. “We go in conscious that their system is fundamentally different than our system,” Robertson noted. This cautious approach is echoed in soft power initiatives, such as encouraging the return of Chinese tourism to Canada and expanding educational exchanges, which had been disrupted in recent years but are now recovering as travel restrictions ease.
Meanwhile, the personal relationship between Canadians and Americans is showing signs of strain. At the Halifax International Security Forum, U.S. Senator Angus King of Maine lamented, “The deeper problem is the cultural break; the idea that Canadians don’t think of Americans as their friends and neighbours, but as adversaries.” Republican Senator Thom Tillis countered that Canada still owes NATO more than $300 billion, while former Congresswoman Jane Harman pointed out that Carney’s government has recently committed to increasing defense spending to two percent of GDP.
Despite these tensions, there is hope for a renewal of trust. Republican Senator Kevin Cramer of North Dakota voiced optimism: “Our relationship with Canadians is very personal. The best way to fix this is to get back to the negotiating table and fix whatever it is that separates us on trade… People in both countries are anxious to reunite.”
As Carney prepares for eventual talks to renew the Canada-United States–Mexico Agreement (CUSMA), and as Canada cautiously expands its ties with China, the country stands at a crossroads. The choices made now will shape not only its economic future but also its sovereignty, security, and sense of identity in a world where old alliances are being tested and new ones are being forged.
